The prospects of armed forces veterans when they leave the services are being hampered by the popular belief that they are likely to be suffering from some form of physical, emotional or mental health problem, a Government-commissioned review has found.

The Conservative peer Lord Ashcroft - who was appointed by Prime Minister David Cameron to look at the transition of ex-service personnel into civilian life - found the great majority did make the change successfully.

However he said the mistaken belief that they were likely to have been damaged in some way by their experience in the military created an unnecessary extra obstacle when it came to finding work.

He said that the Ministry of Defence and the armed forces needed to be more proactive in challenging misplaced public perceptions about veterans.

"Though a small number do have problems and need special provision, service leavers as a whole begin new careers, enjoy good health and are no more likely to suffer PTSD (post-traumatic stress disorder), become homeless, commit suicide or go to prison than the rest of the population," he said in his report.

"Yet there is a widespread public perception that veterans are likely to be physically, mentally or emotionally damaged by their time in the armed forces. This in itself constitutes an unnecessary extra hurdle for service leavers, restricting their opportunities by lowering expectations of what they can do."

While the report acknowledged that a great deal of support was available to service leavers, it found that those who were most likely to need help in transitioning to civilian life actually received the least assistance.

It found that early leavers who had completed four years service or less were the most likely to experience unemployment or other problems, however they received only the most basic support package for transition, even though they may have undertaken gruelling operational tours in places like Afghanistan.

The review put forward a series of practical recommendations including the creation in partnership with industry of a new work placement scheme to give service leavers practical experience of civilian employment.

It said that all personnel should be required to complete an online personal development plan at the end of their basic training setting out their long-term career aspirations in order to encourage them to take up educational opportunities available in the forces.

"There is already a great deal of provision in place to support service leavers, and this has improved considerably in recent years with the advent of the Armed Forces Covenant and greater public understanding of the needs of the forces community. This can still be improved upon, however," Lord Ashcroft said.

Veterans minister Anna Soubry said that steps had already been taken to ensure that all leavers - including those with less than four years service - received the full support package.

"Whilst this review highlights that most service leavers make a successful transition into civilian life, go on to play important roles in their local communities and are highly coveted for jobs, we know we can still do more," she said.

"We will continue to work closely with service charities, employers, other government departments and local government to consider how best to take these recommendations forward and ensure that all our armed forces receive the very best transition into civilian life."